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What if we took that thinking and turned it around: The minimum wage for a McDonalds cashier in NYC is $15/hour. McDonalds also operates in India, and hires c

by bhupy 6y ago

What if we took that thinking and turned it around: The minimum wage for a McDonalds cashier in NYC is $15/hour. McDonalds also operates in India, and hires cashiers that do essentially the same work. If the employe was able to pay $15/hour for the same type of work in NYC, then shouldn't they pay the Indian cashier INR 1,125 / hour? Or what about the other way around, why shouldn't the NYC cashier get paid at the Indian cost-of-living? And forget wages, how about the cost of goods and services? A 4BR house in Columbus, OH can cost about $300,000 — but the same house might cost about $3M in Palo Alto. Is this unfair / discriminatory? The house itself might be identical.

daenz 6y ago
I disagree with both of those examples because the physical location of the job/house is the important factor affecting the cost. In the McDonalds example, the physical restaurant is embedded in the community and partakes in the market forces of that physical location. In the house example, same thing, the physical house is embedded in the community and partakes market forces derived from the demand of others wanting to live in that community. The location of the job or asset affects its value. However, in remote work, this is no longer true to the degree of other jobs (disregarding regional taxes, paperwork, etc). The job can exist anywhere and the value derived from it (all else being equal, like worker quality, etc) does not change.
- bhupy 6y ago
  > In the McDonalds example, the physical restaurant is embedded in the community and partakes in the market forces of that physical location Wouldn't this be true of remote software engineer jobs too? Market forces would drive wages downward. If you live in Minnesota and demand SF-salary, your neighbor (who is similarly qualified) might accept a lower salary, and their neighbor might accept an even lower salary, etc until you find the local market equilibrium. Are you suggesting that that's unjust?
  - daenz 6y ago
    The difference is that the equilibrium reached from SF-based neighbors undercutting eachother, would be different from the equilibrium reached from Minnesota-based neighbors undercutting eachother, for the same job and qualifications.
    - bhupy 6y ago
      Yes, and? The net result of that is that software engineers in Minnesota get paid lower than software engineers in SF. My question is: how is this unjust? By your own argument, the difference in salaries for physical cashiers across the globe can be attributed to market forces. I'm making the same argument re: remote software engineer salaries.
      - daenz 6y ago
        I don't know that it is or is not unjust. I am suspecting that it is because the employer has an information advantage (knowledge of the employee's location) granted implicitly by government regulation (employment paperwork). It is not normal market forces. This information advantage doesn't exist in the same way for non-remote work.
        bhupy 6y ago
        That's not really an information advantage — the employer can demand that information even without the need for employment paperwork (ignoring the impracticality of that for argument's sake). An employer has an interest in knowing in which time zone their remote employee is situated. If there is onsite work to be done with clients in different geographies, knowledge of where employees live so as to be able to efficiently deploy them is also another use case. And finally, the employer can simply demand that the employee divulge that information through negotiation leverage — the same way that they can force an employee to divulge their name. Also, this argument can be used the other way around. Why should an employee know what the employer's finances are? Perhaps the employer has the raw ability to pay an employee more (even if it's not economically expedient), but why should the employee know this? Why should the employee know where the employer is physically situated? In every market, the employee and employer both have information on where the other is situated and how much they are able to pay / receive. That's not really information asymmetry. Also, at this point, remote software engineer salaries are some of the most well published in the industry, though there is definitely room for improvement in salary transparency. All that being said, I don't think you can convincingly argue that ALL remote software engineers ought to be paid exactly the same, regardless of their local cost of living. They can certainly try to negotiate their wages up, but there will also be downward pressure on wages if the labor market is loose enough.

by bhupy 6y ago

daenz 6y ago

I disagree with both of those examples because the physical location of the job/house is the important factor affecting the cost. In the McDonalds example, the physical restaurant is embedded in the community and partakes in the market forces of that physical location. In the house example, same thing, the physical house is embedded in the community and partakes market forces derived from the demand of others wanting to live in that community. The location of the job or asset affects its value. However, in remote work, this is no longer true to the degree of other jobs (disregarding regional taxes, paperwork, etc). The job can exist anywhere and the value derived from it (all else being equal, like worker quality, etc) does not change.

bhupy 6y ago
> In the McDonalds example, the physical restaurant is embedded in the community and partakes in the market forces of that physical location Wouldn't this be true of remote software engineer jobs too? Market forces would drive wages downward. If you live in Minnesota and demand SF-salary, your neighbor (who is similarly qualified) might accept a lower salary, and their neighbor might accept an even lower salary, etc until you find the local market equilibrium. Are you suggesting that that's unjust?
- daenz 6y ago
  The difference is that the equilibrium reached from SF-based neighbors undercutting eachother, would be different from the equilibrium reached from Minnesota-based neighbors undercutting eachother, for the same job and qualifications.
  - bhupy 6y ago
    Yes, and? The net result of that is that software engineers in Minnesota get paid lower than software engineers in SF. My question is: how is this unjust? By your own argument, the difference in salaries for physical cashiers across the globe can be attributed to market forces. I'm making the same argument re: remote software engineer salaries.
    - daenz 6y ago
      I don't know that it is or is not unjust. I am suspecting that it is because the employer has an information advantage (knowledge of the employee's location) granted implicitly by government regulation (employment paperwork). It is not normal market forces. This information advantage doesn't exist in the same way for non-remote work.
      - bhupy 6y ago
        That's not really an information advantage — the employer can demand that information even without the need for employment paperwork (ignoring the impracticality of that for argument's sake). An employer has an interest in knowing in which time zone their remote employee is situated. If there is onsite work to be done with clients in different geographies, knowledge of where employees live so as to be able to efficiently deploy them is also another use case. And finally, the employer can simply demand that the employee divulge that information through negotiation leverage — the same way that they can force an employee to divulge their name. Also, this argument can be used the other way around. Why should an employee know what the employer's finances are? Perhaps the employer has the raw ability to pay an employee more (even if it's not economically expedient), but why should the employee know this? Why should the employee know where the employer is physically situated? In every market, the employee and employer both have information on where the other is situated and how much they are able to pay / receive. That's not really information asymmetry. Also, at this point, remote software engineer salaries are some of the most well published in the industry, though there is definitely room for improvement in salary transparency. All that being said, I don't think you can convincingly argue that ALL remote software engineers ought to be paid exactly the same, regardless of their local cost of living. They can certainly try to negotiate their wages up, but there will also be downward pressure on wages if the labor market is loose enough.